Freedom’s just another word....

... for nothing left to lose?

Fingers crossed anyway

cheers

https://www.afr. com/companies/manufacturing/freedom-foods-shares-tank-after-hiatus-20210322-p57cv8


Freedom Foods shares tank after hiatus
Carrie LaFrenzSenior reporter
Mar 22, 2021 – 11.57am

Freedom Foods Group made a dramatic return to the ASX Monday as investors rushed for the exit with the company’s shares now valued at a small fraction of their value before accounting irregularities were uncovered nine months ago.

Shares in the maker of UHT milk and plant based drinks fell 82.4 per cent to just 53¢, sinking its market capitalisation to around $146 million from $834 million when it last traded on June 24 at $3.01 per share.


Freedom Foods Group main backer Tony Perich has committed $200 million to help save the company.  Rob Homer

Institutional investors sold while activity ramped up with day traders. CommSec was the top broker handling trades on Monday. A total of 218 million shares exchanged hands.

The value of the Freedom Foods stake controlled by its largest backers, the Perich family, was wiped to just $75 million from $428 million in a few short hours.

Fund managers said so much damage had been done in the past nine months when the company was forced to restate several years worth of accounts, take major write-downs and a report flagged the prospect of fraud.

They said while the Perichs did everything possible to salvage the situation, it was very difficult to value the group’s equity.
“The [notes] deal is not the cleanest deal, and the turnaround time frame ... a lot of long only managers won’t feel this is appealing,” said one fund manager.
“It’s hard to to get a good sense of what it is worth given it has not really de-geared.”

The sharemarket bloodbath was expected given the turmoil enveloping the group in the past year, which culminated in Friday’s late call with investors in which Freedom Foods said it was seeking to raise up to $265 million in fresh capital via an unlisted convertible note issue at $1 per share.

The offer is comprised of a $130 million issuance to wholesale investors and a placement to the Perich family’s investment group, Arrovest, to raise another $200 million.
Arrovest hopes to scale back its investment to a minimum of $135 million, depending on the level of participation under the wholesale offer.

On March 19, Freedom Foods announced it had entered into binding agreements with the Perich family and its two senior lenders, NAB and HSBC, to recapitalise the business.

On Friday night, new chairwomen Genevieve Gregor said proceeds will be used to repay between $183 million and $233 million of its existing debt.

Freedom Foods also plans to offer about 40.8 million ASX-listed options to acquire shares on a pro-rata basis to shareholders to raise up to a maximum of $40 million.
In three years, following conversion at maturity of the notes, Arrovest will control between 51.5 per cent to 80.5 per cent of Freedom Foods.

Ms Gregor said Friday the issue of notes was the preferred capital raising structure because it provided investors a chance to participate in any future upside, while protecting investors given the subordinated security over the company’s assets.

Freedom Foods is facing two class actions as well as a major legal dispute with a US supplier.
Freedom Foods is also facing an ongoing investigation by the corporate regulator.

The only winners out of the mess appear to be the long list of advisers. Lead manger on the capital raising, Moelis Australia, will make a fee of $2.25 million.
In addition it will receive an offer management fee equal to 1.2 per cent of gross proceeds of the wholesale offer.

Law firm Arnold Bloch Leibler will pocket $2 million for its services, while PwC acted as tax adviser snaring it $150,000 in fees.